ABA defends possible extra hikes
(1st October 2010 – Australia) The Australian Bankers’ Association (ABA) has spoken out in defence of the nation’s banks, as expectations grow that some banks will use this month’s predicted rate rise as an excuse to push interest hikes above that of the Reserve Bank’s decision.
The ABA said on Friday that the cash rate was only one factor in determining the cost of funds lent to businesses and homeowners.
A key factor that determines the interest rates banks need to charge is the real cost of money, said ABA chief executive Steven Munchenberg.
Thirty cents in every dollar lent by Australia's major banks has to be raised from overseas investors, the Sydney Morning Herald reported.
The cost of that money has remained high and volatile and is not controlled by the Reserve Bank, Mr Muchenberg added.
UBS analyst Jonathan Mott has predicted that the big banks are likely to 'piggy back' off the expected rise, possibly pushing through around 15 basis points of additional rises across their variable mortgage rates.
Mr Munchenberg also told the Sydney Morning Herald that strong competition for deposits was also pushing up funding costs for banks.
This also adds to the costs of lending, Mr Mott highlighted.
Mr Mott added that while banks have a responsibility to look after their customers, they also have a responsibility to remain solid and healthy so that they can continue to raise money offshore from overseas investors to support the growing Australian economy.
A key factor that determines the interest rates banks need to charge is the real cost of money, said ABA chief executive Steven Munchenberg.
Thirty cents in every dollar lent by Australia's major banks has to be raised from overseas investors, the Sydney Morning Herald reported.
The cost of that money has remained high and volatile and is not controlled by the Reserve Bank, Mr Muchenberg added.
UBS analyst Jonathan Mott has predicted that the big banks are likely to 'piggy back' off the expected rise, possibly pushing through around 15 basis points of additional rises across their variable mortgage rates.
Mr Munchenberg also told the Sydney Morning Herald that strong competition for deposits was also pushing up funding costs for banks.
This also adds to the costs of lending, Mr Mott highlighted.
Mr Mott added that while banks have a responsibility to look after their customers, they also have a responsibility to remain solid and healthy so that they can continue to raise money offshore from overseas investors to support the growing Australian economy.
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